High US health costs due to prices, not quality, says study

The US spends far more on health care than 12 other industrialised countries, yet it does not provide "notably superior" care to their much less expensive systems, a new study finds.

US healthcare expenditure accounts for 17.4% of Gross Domestic Product (GDP), says the study, from US policy research foundation The Commonwealth Fund. The next-highest percentage among the group of 13 nations studied is the Netherlands, way behind at 12%, and the lowest are 9.8% in the UK, 9.6% in Norway, 8.7% in Australia and 8.5% in Japan, it adds.

The US's high spending cannot be attributed to higher income, an older population or greater supply or utilisation of hospitals and doctors; rather, it is more likely due to higher prices, and perhaps also to more readily accessible technology, says study author David Squires, senior research associate at the Fund.

For example, US prices for the 30 most commonly-used branded prescription drugs are more than double the prices paid in Australia, France, the Netherlands, New Zealand and the UK, and they are a third higher than in Canada and Germany. In contrast, prices of generic drugs are lower in the US than in any of the other 12 nations, the study finds.

But the US has fewer physicians per 100,000 population than any of the other countries apart from Japan, and the fewest doctor consultations (3.9 per capita) than any except Sweden. Relative to the other countries in the study, the US also had few hospital beds, short lengths of stay for acute care and few hospital discharges per 1,000 population. However, US hospital stays are far more expensive than in other countries, at more than $18,000 per discharge compared with about $13,000 in Canada and under $10,000 in Sweden, Australia, New Zealand, France and Germany.

"It is a common assumption that Americans get more health services than people in other countries, but in fact we do not go to the doctor or the hospital as often," said Mr Squires. "The higher prices we pay for health care and perhaps our greater use of expensive technology are the more likely explanations for high health spending in the US. Unfortunately, we do not seem to get better quality for this higher spending," he adds.

For example, while the US performs well on breast and colorectal cancer survival rates, it has among the highest rates of potentially preventable deaths from asthma and amputations due to diabetes, and rates that are no better than average for in-hospital deaths from heart attack and stroke.

And while the high rates of obesity in the US and the associated medical costs might explain the nation's high levels of healthcare spending, at least in part, Mr Squires points out that the US also has a very young population and few smokers relative to the other countries, factors which could offset higher spending linked to obesity.

Japan offers "an interesting model" for controlling costs, the study comments. Although its health care system shares certain features with the US, Japan is the lowest-spending nation of the group of 13. It operates a fee-for-service system, while offering unrestricted access to specialists and hospitals. Rather than containing costs by restricting access, Japan sets health care prices to keep total spending within a budget allotted by the government.

In contrast, in the US, individual payers negotiate prices with health care providers, a system that leads to complexity - and varying prices for the same goods and services, says the study.

- The 13 countries surveyed for the report are Australia, Canada, Denmark, France, Germany, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the UK and the US.